Pricing and revenue optimization

Course outline Basic price optimization, examples Looks at pricing the product depending on the cost and demand structure Looks at different demand curves and their implications Practical outcome: imputed elasticity as a sanity check for current pricing Whether to maximize revenue or total contribution, Solver Price differentiation, examples Segment market and find optimal prices, Solver Different prices for the internet channel and the retail store Considers arbitrage, that can occur between the markets, Solver Optimal pricing with cannibalization, Solver Optimal pricing and finding the best possible segmentation – at which price to segment the market, Solver

Course outline Pricing with constrained supply, examples Pricing with a capacity constraint, Solver Market segmentation and supply constraints, Solver Variable pricing, Solver Revenue management – mostly for airlines, hotels, car rentals Capacity allocation, examples Setting booking limits Decision tree approaches Different assumptions and their implications The use of heuristics Network management, examples Network linear programming problems, Solver Overbooking

Course outline Markdown management, examples Pricing decision is taken in subsequent steps, Solver Deterministic problem, problem with uncertainty Estimating markdown sensitivity with the least squares method, Solver Customized pricing, B2B Customer acceptance

Grading the course 50% of the grade comes from writing a recap of a revenue management case study 50% of the grade is due to an assignment solved during the exam, the use of all materials permitted, plenty of time to solve – at least 4 hours

Course textbooks